* World stocks slip after Fed, before ECB
* BoE statement, limited QE rise lifts sterling
* Euro down as stocks sell off
By Jeremy Gaunt, European Investment Correspondent
LONDON, Nov 5 (Reuters) - World stocks slid on Thursday
following the Federal Reserve's decision to keep interest rates
near zero for "an extended period" and ahead of a policy
decision by the European Central Bank.
The Bank of England kept rates steady at 0.5 percent, as
expected, but also increased its programme of asset purchases by
25 billion pounds. That was at the bottom end of what analysts
had been forecasting -- though in line with a Reuters' consensus
-- and it pushed sterling higher and bonds lower in the UK and
the euro zone.
The dollar was generally higher against major currencies,
however, recovering from a post-Fed sell off and as the stock
sell-off hit the euro.
Investors were also bracing for Friday's monthly U.S. jobs
report, which often prompts volatility on financial markets.
"Investors were pushing the market lower, preparing for more
selling by investors such as hedge funds in case U.S. jobs data
raises a disturbance," said Tsuyoshi Segawa, an equity
strategist at Mizuho Securities.
Adecco <ADEN.VX>, the world's largest staffing company, said
a tentative pickup in demand for temporary workers and signs
that companies are making fewer layoffs have boosted its
confidence in the economic recovery.
MSCI's all-country world stock index <.MIWD00000PUS> was
down 0.3 percent. The pan-European FTSEurofirst <> slid
0.5 percent and Japan's Nikkei <> closed down 1.3 percent.
The Fed's closely watched policy statement late on Wednesday
was somewhat more upbeat than its statement in September.
However, it was also more explicit about why it expects to
keep rates low for some time yet, citing "low rates of resource
utilization, subdued inflation trends, and stable inflation
expectations", none of which point to a buoyant economy.
That took the edge off a Wall Street rally and the mood
carried over into Asia and Europe, where investors were also
jittery about the ECB and BoE.
Bank of New York-Mellon said it did not expect the ECB to
change interest rates.
"But given the hawkish eyes with which the ECB sees the
world, it would be prudent to suppose that the risks of an
unexpectedly hawkish policy line are credible and hence that
some imminent dismantling of its `emergency' measures is
entirely plausible," it said.
DOLLAR GAINS
The dollar and yen gained broadly after a brief post-Fed
rally by the euro.
"Following the very sharp gains seen (in the euro and higher
risk currencies) in the wake of the Fed decisions, it is not
surprising to see a bit of profit-taking, particularly given
that equities and commodities have moved lower," said Michael
Klawitter, currency strategist at Commerzbank in Frankfurt.
The dollar index <.DXY>, which tracks the dollar against a
basket of currencies, was up 0.2 percent. The euro <EUR=> fell
0.2 percent to $1.4835, having added more than 1.0 percent on
Wednesday.
Sterling <GBP=D4> jumped more than a full U.S. cent to
$1.6620 after the BoE decision, hitting its highest in two weeks
as well as a day high of 89.33 pence against the
euro<EURGBP=D4>.
Euro zone government futures hit a session low, taking a cue
from the sell-off in UK government debt.
Two-thirds of analysts had predicted the bank would expand
its asset-buying scheme, but opinion had been split on whether
the increase would be 25 billion or 50 billion pounds.
(Additional reporting by Jessica Mortimer, editing by Patrick
Graham)
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge Hub
click on http://blogs.reuters.com/hedgehub)
